The game changer

The game changer

Features - Cover Story

A new insurance program has emerged for snow and ice managers that not only ensures affordable coverage, but redefines professionalism for the industry. This is the story of how it came to fruition.

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August 4, 2014

There’s a photo Kevin Gilbride likes to show people that sums up the reason why the Accredited Snow Contractors of America exists.

It focuses on a modestly sized, unassuming business billboard set against a winter backdrop. It’s really no different than countless others that advertise goods and services outside of small businesses from coast to coast. This one, though, in its big, black block type features a message from a local attorney who guarantees a large payout for any slip-and-fall claim.

“A lot of people don’t understand how critical this issue is for our industry,” says Gilbride, the ASCA’s executive director. “Many don’t realize plaintiff’s attorneys see the snow industry as a feeding frenzy.”

Without a doubt, insurance has been a major stumbling block for professional snow and ice managers. Likewise, the professional snow removal industry was no gem for the insurance industry. For example, in 2011, insurance brought in $500 million in premiums from the industry, but paid out nearly $1 billion in claims. That’s a 2-1 loss ratio for the insurance industry. To most, snow would seem to be bad business to insure.

As a result, each winter fewer and fewer carriers were willing to insure snow and ice operations, with as many as eight to 12 standard carriers leaving altogether.

So in 2010, in an open-forum style discussion at the conclusion of Snow Magazine’s Executive Summit in downtown Cleveland, attendees were asked to identify the major problems the industry faced in the coming years.

“After an hour and a half we identified the top three issues detrimental to the industry – insurance, insurance and insurance,” Gilbride says. “However, it wasn’t until after Executive Summit, when we really dove into the insurance issue, that we learned insurance wasn’t the problem. Rather, it was a symptom of a greater problem.”

Insurance was becoming unaffordable. Contractors cited annual coverage jumps from $10,000 to $40,000, from $17,000 to $80,000 and upwards as examples.

“Paying $150,000 may not be a big deal for a large snow removal company,” Gilbride says. “But if you’re paying $17,000 for insurance and doing around $500,000 in winter revenue, a policy price increase to $80,000 is significant. So what do you do? At the time, we didn’t have any answers.”

What followed was a crash course about insurance, identifying risk and how carriers viewed the snow and ice management industry. Anyone can drop a plow on a pickup and call themselves a snow contractor, Gilbride says. However, running a successful snow and ice management operation is a whole different ballgame.

“We learned quickly we needed to educate insurance companies about our industry,” he says. “Then we needed to develop a way to give [insurance companies] a comfort level and a designation that identified and acknowledged who, from an insurance perspective, were the best-run snow companies.”

One year later, a plan was in place.
 

The foundation

Every successful initiative starts with a solid foundation. To fix a problem as weighty as insurance, the ASCA needed to establish four strong pillars of support.

The first was to establish written industry standards, essential system requirements for snow and ice management. “If a contractor was called into a slip-and-fall deposition one of the first questions the plaintiff’s attorney asks is for the contractor to produce a copy of the industry standards… except there were none,” Gilbride says. “The majority of the time this would lead to the insurance company settling the claim regardless if the contractor was at fault because there was no accepted standards and procedures for the industry... There was an open-checkbook attitude with insurance companies to make [slip-and-fall claims] just go away. Well, those days are over because we’re going to fight.”

Once Industry Standards were established, the ASCA worked through the American National Standards Institute (ANSI) – a private, non-profit organization that oversees the development of voluntary consensus standards – to certify the standards. Today, every new ASCA member receives a copy of the Industry Standards.

The ASCA’s second pillar was to develop and administer Industry Standards-based education. Then, to certify snow contractors as proficient on the standards-based education, a certification (ASCA-C) was created.

ASCA-C is based on the completion of 10 credit hours annually of ASCA-based online education (classes and testing are administered via the ASCA website). The association recently introduced its 300-level courses, with 400-level in development. In early July, more than 250 snow and ice managers had earned ASCA-C, with about another 500 in the process for certification.

The third pillar, really the glue that cements everything together, is the creation and implementation of ISO 9001/SN 9001. This verification process involves a third-party audit that verifies Industry Standards are a part of a contractor’s overall snow and ice management operations.

ISO is the same certification most commonly associated with the manufacturing sector. In fact, manufacturing companies readily tout their ISO status because certification is a feat worthy of promotion. “The manufacturing and snow removal cultures may be different, but the ability to live up to the contract you’ve signed with your customer and to live up to your organization’s operational expectations are universal,” Gilbride says. “ISO is all about running a responsible business.”

However, ISO 9001/SN 9001 is a very unique opportunity for the professional snow and ice management industry. “There is a sense of intimidation about taking on a third-party audit of your snow ops processes and procedures,” he says. “But I’ve spoken with contractors who have successfully completed this process and many are surprised by how much required for ISO certification was already in place… it’s just wasn’t seen that way.”

For example, take your sales process. Who engages clients? How is an order taken and a contract finalized? Where does the documentation go? How is the client serviced during the snow season? Who handles complaints or concerns? How is the client retained?

The sales example is a very basic outline of a business process, but it’s typical of the flow-chart style that represents how a typical successful snow operation handles its various procedures. However, in the instance of ISO certification, these various procedures are written down, communicated and followed. It is those processes that are verified by the third-party auditor.

“ASCA took ISO 9001 and through ANAB we added the Industry Standards to the auditing process to create SN 9001,” Gilbride says. “We did this to change the outside world’s perception – insurance companies in particular – that our members are doing these things to prevent (slip-and-fall) claims.” For example, more than 50 percent of slip-and-fall claims are lost or settled due to lack of proper documentation. ISO 9001/SN 9001 certified contractors have the processes and procedures in place to ensure documentation is accurate and complete.

“When considering a slip-and-fall claim, a plaintiff’s attorney is looking to answer three questions – Can I win? How much can I win? How quickly can I win?” he says. “A claim against an ISO contractor makes it more difficult to answer those questions.”

In November 2012, ISO received ANAB accreditation, and nearly one year to the day Case Snow Management became the first company to earn ISO 9001/SN 9001 certification. Since then two other companies have earned certification, nearly 30 more have engaged the process, and at least another four dozen are doing their due diligence to prepare for certification.
 

The fourth pillar

Legislative change is the final pillar in the ASCA’s foundation, and arguable one of the most important. “We must pursue and lobby for tort reform,” Gilbride says. “The ASCA and our industry needs to play an active role in changing the laws of this country and make it either more difficult, or unattractive, for plaintiff’s attorneys to file baseless, frivolous law suits in the pursuit of an easy payday.

In July 2013, nearly 30 ASCA members converged on Washington D.C. for the first time as a united front to educate representatives on industry issue. Specifically, they championed tort reform and an end of frivolous lawsuits.

This July, the association was scheduled to head back to Capitol Hill to continue to educate representatives on industry issues.
 

An answer

Between August 2010 and August 2011, the ASCA met with a number of insurance carriers, brokers and agents to understand their concerns about underwriting snow and ice management.

“We gathered all of the information and we asked ourselves how we can best address this,” Gilbride says.

Industry Standards, ASCA-C and ISO 9001/SN 9001 are all components of that answer. The end result has been the introduction of an affordable insurance product exclusive to the snow and ice management industry.

“In 2012, we began to work with Matt Peterson and New Jersey-based Mills Insurance – who’s been a valued partner with the ASCA throughout much of this process – to develop an insurance solution,” Gilbride says. “Together, we began to educate carriers and show them how we could help them, the solutions we’d developed, and what a successful snow and ice operation looks like… It really opened their eyes.”

Loss runs will always be a part of snow and ice management’s insurance equation. However, this new insurance program – administered by Snow Removal Insurance Brokerage – offers discounts of up to 25 percent off the base rate for education based on Industry Standards (ASCA-C).

Likewise, the insurance program offers an additional reduction – upwards to 20 percent – for snow and ice management operations that have earned ISO 9001/SN 9001 certification. That’s a 25 to 45 percent savings.

“Through this program, insurance underwriters are saying they recognize the value in ASCA-C and ISO and want to do business with those certified contractors,” he says. “In the end, it’s about dollars and cents, and if the insurance companies believe they can save money on frivolous slip-and-fall claims because the certifications serve as a deterrent, then they will gravitate toward doing business with those contractors.”
 

Going forward

The ASCA continues to evaluate and monitor SN 9001 and the ASCA-C certifications, both of which are based on the Industry Standards, which Gilbride says is a living, evolving document.“We’re constantly reaching out and evaluating industry feedback as it relates to SN 9001 and ASCA-C,” he says. “As technology advances and the industry develops the way it successfully conducts and executes business, we need to make sure these certifications reflect those advancements.”

As for ASCA-C and ISO’s impact, in addition to insurance, Gilbride says owners and managers of high-risk properties are identifying ISO as a solution. Others are preferring to award business to ASCA-C firms. “Remember, a lot of this is new not only to the snow and ice industry, but to property managers and building managers and everyone this industry engages with,” he says. “While we’ve gotten off to an impressive start with the number of firms engaged in ASCA-C and ISO, and the companies that are beginning to recognize the value in those designations, it’s going to take some time for this to build some real momentum.”

Five years from now, Gilbride anticipates a significant reduction in frivolous slip-and-fall claims filed, which will create a more stable business environment for the insurance industry. This, in turn, will result in reduced insurance premiums.

Likewise, he expects property owners and managers – specifically large and high risk entities (think Big Box) to make ASCA-C and ISO requirements for bidding.

“The impact over the long term for our industry is that we’re going to have better run companies set up for significant growth,” he says. “If we can strengthen this industry, then everyone in the industry benefits.”

 


Mike Zawacki is editor of Snow Magazine.

 

Questions about ISO?
For more about the ISO 9001/SN 9001 auditing process and what is expected from a snow removal operations, check out the features in this month’s Big Picture, starting on page 89.